Cash grants will be available to businesses ordered to close due to local lockdowns in England, the Government has said.

Chief Secretary to the Treasury Stephen Barclay said “lifeline” grants of up to £1,500 will be on offer every three weeks.

His announcement came as Labour demanded targeted income support for businesses and self-employed people in sectors which have been most affected by coronavirus.

The Opposition also called for extra income support to be given to areas of the country placed under local lockdown restrictions.

Addressing the House of Commons, Mr Barclay told MPs: “We know the impact these local measures have on people and businesses.

“Today I can announce further new measures to support businesses.

“The Government will provide direct cash grants to businesses that have been ordered to close.

“Closed businesses with a rateable value of £51,000 or less will receive a cash grant of £1,000 for each three-week period they are closed.

“For closed businesses with a rateable value higher than £51,000, the grants will be £1,500.

“The grants will cover each additional three-week period, so if a small business is closed for six weeks, it will receive £2,000.

“This new support will give closed businesses a lifeline through the difficult, but temporary, experience of lockdown.

“An important next step in our economic plan to protect jobs and businesses against coronavirus.”

He said Business Secretary Alok Sharma will bring forward further details shortly.

Mr Barclay also defended the decision to wind up the furlough scheme at the end of October.

He said: “Firstly the furlough is over eight months already, it is one of the most generous schemes in the world and we have been contributing at a higher rate of people’s wages than in Spain.

“We are supporting a wider range of businesses than in New Zealand and our scheme will run for twice as long as in Denmark.”

Shadow chancellor Anneliese Dodds earlier said the Government must show “some humility, willingness to listen and flexibility” with regards to the furlough scheme.

Introducing Labour’s debate on the extension of the furlough scheme and protecting jobs, Ms Dodds told MPs: “Our country is in the grip of a jobs crisis, a crisis that will intensify if the Conservative Government does not change course.”

She added “it is not enough for Government now to say simply that this is an unprecedented crisis and that there is only so much that can be done to mitigate the damage”.

Ms Dodds said: “We believe Government needs to be sitting down, talking to exactly those stakeholders that it trumpets so much it worked with when it created the furlough scheme, so that it can provide that system of support that is necessary to protect jobs, to protect our economic capacity.

“And as I have said time and time again, we do not believe that a continuation of the furlough scheme precisely as it stands now is what is required, we need a targeted wage support scheme which, as I will go on to mention, is exactly the approach being taken by huge numbers of other countries but which this Government is turning its face against.”

SNP economic spokeswoman Alison Thewliss said: “A further spike and further local restrictions seem absolutely inevitable too, so ending support now is incredibly short-sighted.”